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What the Eurozone crisis teaches about us

As should be well known today, there is an ongoing financial crisis in the Eurozone centred around Greece. Namely, Greece defaulted on its IMF loan, and although a new bailout package has been more or less secured, the future of the Eurozone is now seriously questioned.

The Greek crisis teaches us many things here in Canada and the US. Although it is a less serious problem in Canada, Canada being much more egalitarian than our southern neighbours, we often hear about how great various socialist states in Europe are doing. Moreover, we distance ourselves from the kind of turmoil that is currently engulfing the Eurozone, as we think we are much more united than the different stated in Europe. However, I argue that we are closer to the latter than the former.

I believe the main obstacle to achieving more equitable social programs and wealth distribution schemes is our inability to identify all other citizens as a part of the same tribe. Indeed, being countries that depend on immigration for population growth and featuring a highly diverse population, racism inevitably comes into the picture. While a significant portion of Canadians and Americans are not white, they usually cannot be identified as ‘Canadian’ or ‘American’ unless they show their passports. This includes people who have lived on this continent for generations, and ironically, even includes native people. As such, the white dominated majority in both countries favour rules that keep the ‘others’ down. This is particularly severe in the US, where their prison system and the school-to-prison pipeline disproportionately affects minorities. This means that most people cannot accept a “we are all in this together” premise, applied to a national scale. Therefore, our innate racism and tendency to see people who look different as others prevent us from adopting socialist policies that we seem to like in Europe, because in those countries the population is almost uniformly homogeneous.

The Eurozone crisis is an exaggeration of what could happen if racial harmony deteriorates further. The root problem with the Eurozone is that while European leaders have a responsibility to safeguard the collective economic prosperity of the Eurozone, they are only held accountable for the prosperity of their own nation, as they are all nationally elected leaders (i.e. even if Angela Merkel does something that seriously damages the Eurozone but Germany comes out on top, making Merkel super unpopular in the Eurozone but popular in Germany, she will still be elected). This potential conflict of interest obstructs the European Union from becoming a functioning body. In a single nation, inevitably rich people and wealthy places subsidize poor people and impoverished places. This may not be done directly, but each nation collects taxes at the nation level, and have national social programs that directly or indirectly redistribute wealth. Wealthy places naturally pay more taxes, and in most cases benefit less proportionately from welfare programs, therefore creating a subsidy effect. Usually people don’t have too much of a problem with this because they need to accept, albeit begrudgingly perhaps, that their tax dollars are helping their fellow countrymen. This is not so on the scale of the EU, since Germans will likely never see Greeks as ‘their own’. This is further exacerbated by the strong national identities in Europe that have persisted for millennia.

While the problem is not quite so severe in Canada, some of our attitudes are just as problematic. For instance, the basic premise that paying taxes is a drain on one’s personal finances rather than an investment towards creating better public goods. Our sense of other prevents us from seeing the utility of ‘public goods’, because of the perception that ‘others’ will use them up more than us or even that ‘others’ will use these goods when they don’t ‘deserve to’. Only when we realize that investment in public goods leads to a better situation for all (and that it’s ok that this investment benefits the poor and disadvantaged more than those who are not poor and not disadvantaged), can we hope to create a better society.